Netflix: Growth In The Midst Of Increasing Competition

This article was originally published by Seeking Alpha on May 21, 2014

By Sarfaraz A. Khan. Research Asst. Gohar Yousuf 
 

Netflix is working to improve the quality of its service to domestic subscribers. The company is nearing a major milestone in the international markets. However, Netflix is facing increasing competition from the new entrants in this industry, particularly from Yahoo but the former still has an edge over others.

How Video Can Propel Yahoo!'s Growth

This article was originally published by TheStreet on April 28, 2014. 

By Sarfaraz A. Khan. Research assistant: Gohar Yousuf

NEW YORK (TheStreet) -- Yahoo! (YHOO_) can seriously grow its video views by more than double in the coming months thanks to two major developments: four original Web series and a major acquisition.

The company has recently released its quarterly results, in which it managed to increase its search as well as struggling display revenue. Earnings were also better than market expectations.

Don't Give Up On Yahoo!'s Growth

This article was originally published by TheStreet

By Sarfaraz A. Khan, Research Assistant: Gohar Yousuf
February 27, 2014

NEW YORK (TheStreet) -- In January, Yahoo! (YHOO_) CEO Marissa Mayer revealed that by the end of 2014, Yahoo!'s mobile traffic will surpass its PC traffic. A week later, Yahoo! released its quarterly results, which beat the market's earnings estimates.

The company's shares sank, however, despite the earnings beat. Yahoo! has suffered with declining revenue, particularly from display ads, with a shrinking share in the U.S display market. Moreover, the company's guidance for the current quarter came below market expectations.

Alibaba -- a company in which Yahoo! holds a significant stake -- also gave results that have been criticized. But Alibaba can post considerable revenue growth in the next quarter. Meanwhile, Yahoo! continues to grow its traffic, particularly in mobile.

The CEO has proven her ability to turnaround Yahoo!'s declining global traffic numbers. She now has to prove her ability to translate the higher traffic into increasing ad sales.

Yahoo!'s shares have been under pressure this year, showing a decline of 6% since January, and are currently trading at around $38.

Investors should watch out for the impending Alibaba initial public offering and the expected increase in Alibaba's revenue for the current quarter, as well as an end to Yahoo!'s declining display-ad sales. Any of these could turn into a catalyst for an upside for Yahoo! investors.

Google's Marissa Mayer is Yahoo’s new CEO

Yahoo! Inc. (NASDAQ:YHOO) has appointed Ms. Marissa Mayer as its new CEO. This would be the company’s third CEO appointment within a span of 12 months. Just two months ago, Mr. Scott Thompson was forced to resign after it was found that his computer degree mentioned in his CV wasn’t original.

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The company has been facing tough competition from Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB). Yahoo News has been the only positively performing aspect of the business while its other products such as the search engine and email aren’t performing that well.

Ms. Mayer has become one of the very few women at the top of the technology industry. Commenting on her appointment, she said that she was “honored and delighted” and that she "look(s) forward to working with the company's dedicated employees to bring innovative products, content, and personalized experiences to users and advertisers all around the world,"

Considering the current shape that Yahoo is in, some analyst were surprised that Ms. Mayer, one of the leading women in the industry, accepted the role. She is often regarded as the brains behind Google’s homepage, Google Earth, Google Maps and its highly innovative ‘street view’.

Mr. Ross Levinsohn, who had served as in interim CEO after Mr. Thompson quit, was expected to take the role of the chief executive. S&P’s Scott Kessler told Reuters that "A lot of people did not believe that Yahoo could get someone of the caliber of a Marissa Mayer to become the CEO at this stage,"

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sarfaraz@when.com

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Relevant Links

Google's Mayer Takes Over as Yahoo Chief [Wall Street Journal]

Google executive Marissa Mayer to become Yahoo CEO in surprise move [The Guardian]

Yahoo turns to Google's Mayer for revival [Reuters]

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Yahoo sells half of its Alibaba stakes

Internet Company Yahoo Inc has decided to sell half of its stake in the Chinese e-commerce group Alibaba for $7.1 billion back to Alibaba. Yahoo had purchased 40% stake in Alibaba in 2005, half of which (20%) is being sold back to the company. Alibaba will pay $6.3 billion in cash and remaining in preference shares. Most of the sale proceeds will be transferred to the shareholders.

Alibaba is a major player in the Chinese internet market, which currently holds the number one spot as the ‘world’s biggest internet bazaar’. Its strength comes from its Chinese online marketplace “Taobao” which is host to approximately 90% of Chinese consumer-to-consumer online trades and 53% of business-to-consumer trades.

Yahoo had purchased 40% stakes in Alibaba for $1bn in 2005. According to recent estimates, the value of the stake is currently around $14bn. Half of the 40% shares are being sold now while the remaining will be sold in different stages in subsequent years. Alibaba’s founder and CEO Jack Ma was quoted as saying that the deal “enables Alibaba to take our business to the next level as a public company in the future.”

Analysts are predicting an IPO of Alibaba’s shares in the future, by December 2015. If this were to happen then either

i)                 Alibaba will buy back further 10% of its shares from Yahoo and will go to the stock market for IPO or

ii)                Alibaba will not buy back anymore shares and will allow Yahoo to conduct an IPO.

It has been a rough couple of years for Yahoo as it faces severe competition from Google and Facebook. Its revenues have plummeted as the company has replaced one CEO after another. Almost exactly four years ago, in May 2008, Yahoo’s shares were soaring at $33 per share and Microsoft had shown interest in buying the business for $47.5bn, an offer which Yahoo declined. The board might regret their decision now as the company shares trade around $15 per share as it receives criticism from shareholders.

Earlier this month, Yahoo CEO Scott Thompson was forced to resign when it was revealed that he had mentioned a ‘fake degree’ in his official CV.

Your comments and feedback are always appreciated.
Sarfaraz A.K.
sarfaraz@when.com
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Yahoo CEO resigns

The Chief Executive of Yahoo Scott Thompson has quit his job after he was accused of having a fake accounting and computer science degree, which was also included in his CV and Yahoo’s financial reports. He is being replaced by Ross Levinsohn who is currently Yahoo’s global media head. Levinsohn will take the CEO’s responsibility on a temporary basis until the board of directors decides on the new CEO.

This is another bad news coming from the company headquarters in Sunnyvale after it announced, a month ago, that it was going to lay-off 2000 employees. Yahoo has been facing severe competition from Google and Facebook and has witness dwindling profits in the extremely competitive environment. After joining Yahoo, Thompson had adopted a severe cost cutting strategy that included the lay-offs and several management changes. He was able to increase the company’s revenues after a gap of nearly three years.  

Prior to joining Yahoo, Thompson was the President of online payments at PayPal. He joined Yahoo in January and was the third CEO in approximately three years. He replaced Carol Bartz who was fired in September, 2011.

He had earlier claimed that he did not possess the accounting and computer science degree but it was his head hunting firm, Heidrick and Struggles’s fault that had included the information in his CV when he joined PayPal in 2000. Heidrick and Struggles had denied the allegation stating that the degree in question was a part of the CV that Thompson had submitted to the firm.

Daniel Loeb, a hedge fund manager and Yahoo’s shareholder, discovered the chief’s fake degree and launched a campaign for his removal. Loeb, who heads the Third Point investment fund which owns 5.8% of the company’s shares, also notified the Securities and Exchange Commission of Thompson’s embellishment.

Yahoo has already officially stated that its CEO did not have a computer science degree.

Following the news, Yahoo is set to change its executives and some new faces are going to join the board of directors. Leob had suggested four new names, including himself, out of which Leob, Michael J Wolf and Harry Wilson will join the board. Five existing board members, who were due to leave in the current year’s annual general meeting will also resign by Wednesday (16^th May).

In its recent statement to the press, the company announced, “The board is pleased to announce these changes and the settlement with Third Point, and is confident that they will serve the best interests of our shareholders …… “

Your comments and feedback are always appreciated.
Sarfaraz A.K.
sarfaraz@when.com
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